Honda has successfully managed to punch the slowdown in its face and emerged on top of it by bringing products which have led to a high demand and thus waiting period. The company still has quite a few products to launch in India but there seems to be some change in plans now. Last year Hironori Kanayama, president and CEO of Honda Cars India had said that the company is studying the entry level segment and reports even stated that the Japanese firm is looking for a third plant where aggressive localisation will be done to price the entry level car competitively against the Maruti Alto 800 and Hyundai Eon.
Now there seems to be a change of heart as the same CEO has clearly stated that Honda has no plans for a smaller car than the Brio, which will continue to be their entry level car in the Indian market. The Brio won’t be getting a diesel engine either, which is a dampener considering the demand for diesel powered hatchbacks. Honda might not be able to use the 1.5-litre i-DTEC engine on the Brio and will thus have to design a new motor. With the demand for petrol cars rising on the backdrop of diesel fuel price increase, investing in a new smaller capacity diesel engine doesn’t make much economic sense.
Honda already has its hands full. The company has limited production capacity and given the success of the Amaze and new City, there isn’t any idle capacity left to produce new models. With the Jazz and Mobilio set for a launch later this year, Honda wants to concentrate on these segments rather than turning attention to an entry level car, a highly competitive segment where reach is equally important as price. Honda doesn’t have the dealership network which Maruti Suzuki and Hyundai can boast off and thus the company will first focus on expanding its retail network across the country. Honda wants to increase its network in both tier-II and tier-III markets which have shown good growth in recent times.